Please remember, ALL “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless we list one. We will send out an “Alert” or “Trade Update” if we want you to close a position OR if a new trade comes out. Otherwise, follow instructions at all times in the 9am and 1pm updates. Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames but it is rare that we do.
12:40pm (EST)
NEW TRADE!!!
Darling International (DAR, $19.07, up $0.75)
Buy to Open July 20 calls (DAR110716C00020000, $0.50, up $0.25)
Action: Use limit order at current prices but do not pay more than 60-65 cents for these options.
This is a stock we have been watching for a few months that is starting to pick up some momentum. The chart is a thing of beauty and we will cover it on Monday.
Spiders S&P 500 (SPY, $133.65, up $0.65)
May 133 calls (SPY110527C00133000, $0.70, up $0.25)
Entry Price: $0.60 (5/24/11)
Exit Target: $1.00 (Closed at 75 cents on 5/27/2011)
Return: 25%
Stop Target: None
Action: These options expire today so make sure you CLOSE the trade by 4pm (EST)!
These options opened at 51 cents and traded up to 80 cents at the open. We said to set limit prices to close the trade at 70 cents or better so everyone should be out of the trade. The return on the trade wasn’t what we were hoping for, we were expecting a double, but we were just a few hours off from hitting a 100% return. We bought these at the open on Tuesday but the rally fizzled that day which set us back. However, a win is a win so we can’t really complain. Next week, the stars are lining up for a solid rally so we may be back in the S&P WEEKLY options again.
If you are still in the trade, you must close these calls today because they are in-the-money and they will get “called away”. There is a chance these call still trade higher but either way make sure the trade closes today.
Vivus (VVUS, $8.87, up $0.10)
September 10 calls (VVUS110917C00010000, $0.65, up $0.05)
Entry Price: $0.65 (5/20/11)
Exit Target: $1.30
Return: 0%
Stop Target: None
Action: These options have nearly 4 months before they expire and we are fairly confident Vivus will be a double-digit stock by the end of summer, if not sooner. Once $9 is cleared, shares will attract momentum traders looking for a push past $10.
MGM Resorts International (MGM, $15.46, down $0.27)
September 17 calls (MGM110917C00017000, $1.00, down $0.10)
Entry Price: $0.70 (5/13/11)
Exit Target: $1.40
Return: 43%
Stop Target: 75 cents
Action: Let’s roll the dice until next week. Continue to hold.
Research In Motion (RIMM, $43.72, up $0.15)
June 40 puts (RIMM110618P00040000, $0.75, down $0.05)
Entry Price: $1.00 (5/10/11)
Exit Target: $2.00
Return: -25%
Stop Target: 75 cents
Action: These options have traded up to 95 cents as RIMM has touched a low of $42.70 today. The 52-week low is $42.53 and our near-term price target is $38 for the stock which gets these options to $2.
Seattle Genetics (SGEN, $19.53, up $0.23)
September 20 calls (SGEN110917C00020000, $2.55, up $0.20)
Entry Price: $1.50 (5/9/11)
Exit Target: $3.00
Return: 70%
Stop Target: $1.25
Action: Seattle Genetics is again at 52-week highs. This trade has the chance of being a monster once $20 is cleared and our triple-digits profits could come twice or three times over if the stock can run to $22-$23.
Starbucks (SBUX, $36.53, up $0.09)
June 38 calls (SBUX110618C00038000, $0.30, flat)
Entry Price: $0.60 (5/9/11)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: The 52-week high is $38.21 and we are expecting a run to $40 for the stock which gets these options to $2.
Dendreon (DNDN, $42.25, up $0.34)
August 50 calls (DNDN110820C00050000, $0.90, flat)
Entry Price: $1.85 (4/14/11)
Exit Target: $3.70
Return: -51%
Stop Target: None
Action: Dendreon continued its urge past $40 and we are eyeing some short-term trades if shares remain strong. The June 43 calls (DNDN110618C00043000, $0.90, flat) jumped 40% yesterday and can be used if shares show continued strength.
Other 2011 Portfolio OPEN positions (5): These are trades that are still open in the portfolio that have longer expiration dates or are on “hold” but are not worth mentioning until they turn around. This means we would not open any new positions. We are still keeping track of the trades and we will record the results, accordingly, when we close them or the options expire. Click on the 2011 Portfolio link in the Members Area to view ALL open/ closed trades.
Vivus June 14 calls (from January 2011)
eBay July 40 calls (from February 2011)
RF MicroDevices August 10 calls (from February 2011)
KLA-Tencor June 48 calls (from May 2011)
Alpha Natural Resources June 44 puts (from May 2011)
WATCH LIST SECTION
These trades are NOT recommendations. They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices. We try not to have more than 12-15 open trades at one time which is why we created a Watch List. We will not list entry prices because these stocks are on the verge of breaking out or they could sell-off.
Polycom (PLCM, $57.37, up $0.65)
June 60 calls (PLCM110618C00060000, $0.75, up $0.10)
Thoughts: The 52-week high for Polycom is $61.70 and shares are capable of strong moves. The stock has been in an uptrend for much of the week which could continue into next.
Kraft Foods (KFT, $34.82, up $0.20)
September 35 calls (KFT110917C00035000, $0.95, up $0.05)
Thoughts: We were able to make 50% on our first Kraft trade and we were hoping we could get these calls for 70-75 cents yesterday. The calls opened at 84 cents and traded down to 81 cents so we will continue to wait to see if we can get these cheaper.
Illumina (ILMN, $72.55, down $0.13)
June 75 calls (ILMN110618C00075000, $0.95, down $0.05)
Thoughts: Watch for now.
Caterpillar (CAT, $105.26, up $1.07)
June 100 puts (CAT110618P00100000, $0.85, down $0.35)
Thoughts: Watch for now.
Freeport-McMoRan (FCX, $51.53, up $1.14)
June 50 calls (FCX110618C00050000, $2.60, up $0.60)
June 45 puts (FCX110618P00045000, $0.20, down $0.10)
Thoughts: This option strangle trade is now up 40% if you closed both the calls and puts at current levels.
Peet’s Coffee and Tea (PEET, $52.42, up $0.43)
June 55 calls (PEET110618C00055000, $1.20, up $0.05)
Thoughts: Peet’s hit a fresh 52-week high of $52.70 and these options opened at 50 cents which is where we were targeting to start new positions. We did not have limit orders set at 50 cents so we didn’t get in…
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